Sector ETF performance comparison: tech vs healthcare 2024

Introduction to Sector ETF Performance Comparison

The sector ETF performance comparison is a crucial aspect of investing, allowing individuals to make informed decisions about their portfolios. As of July 2024, the tech sector, represented by the XLK ETF, has seen a 12.5% return, while the healthcare sector, represented by the XLV ETF, has seen a 9.2% return, according to YCharts data.

2024 YTD Returns: Tech (XLK) vs Healthcare (XLV)

The tech sector has outperformed the healthcare sector in terms of YTD returns, with the XLK ETF seeing a 12.5% return, compared to the XLV ETF’s 9.2% return. This translates to a $1,250 return on a $10,000 investment in the XLK ETF, versus a $920 return on a $10,000 investment in the XLV ETF. The volatility metrics for the two sectors are as follows:

Sector	YTD Return	Volatility
Tech (XLK)	12.5%	15.1%
Healthcare (XLV)	9.2%	10.5%

Dividend Yields Compared

The current dividend yields for the XLK and XLV ETFs are 0.8% and 1.2%, respectively, according to State Street Global Advisors fund factsheets. This means that for every $10,000 invested in the XLK ETF, an investor can expect to receive $80 in dividend payments per year, while an investment of $10,000 in the XLV ETF would yield $120 in dividend payments per year.

Top 5 Holdings Analysis

The top 5 holdings for the XLK and XLV ETFs are as follows:

ETF	Top 5 Holdings
XLK	Apple, Microsoft, Nvidia, Amazon, Alphabet
XLV	UnitedHealth, Johnson & Johnson, Pfizer, Eli Lilly, Merck
According to ETF.com holdings data, the performance of these top holdings has driven the overall performance of the two sectors.

Interest Rate Sensitivity

The tech sector has been more sensitive to interest rate changes, with a correlation coefficient of 0.7, compared to the healthcare sector’s correlation coefficient of 0.4, according to Federal Reserve meeting minutes. This means that changes in interest rates have had a greater impact on the tech sector.

Institutional Money Flows

Institutional investors have been accumulating the XLK ETF, with $1.2 billion in net inflows, compared to $500 million in net inflows for the XLV ETF, according to 13F filings. This suggests that institutional investors are more bullish on the tech sector.

Best Allocation Strategy

The optimal allocation strategy between the two sectors depends on an investor’s risk profile. A conservative investor may allocate 60% to the XLV ETF and 40% to the XLK ETF, while a more aggressive investor may allocate 80% to the XLK ETF and 20% to the XLV ETF, according to Vanguard Portfolio Allocation Models.

Allocation Strategy Comparison

Allocation Strategy	XLK ETF	XLV ETF
Conservative	40%	60%
Aggressive	80%	20%

Frequently Asked Questions

What is the best sector ETF to invest in?

The best sector ETF to invest in depends on an investor’s risk profile and investment goals. The XLK ETF has outperformed the XLV ETF in terms of YTD returns, but the XLV ETF has a higher dividend yield.

How do I allocate my portfolio between the XLK and XLV ETFs?

The optimal allocation strategy depends on an investor’s risk profile. A conservative investor may allocate 60% to the XLV ETF and 40% to the XLK ETF, while a more aggressive investor may allocate 80% to the XLK ETF and 20% to the XLV ETF.

What are the top holdings of the XLK and XLV ETFs?

The top 5 holdings of the XLK ETF are Apple, Microsoft, Nvidia, Amazon, and Alphabet, while the top 5 holdings of the XLV ETF are UnitedHealth, Johnson & Johnson, Pfizer, Eli Lilly, and Merck.

How do interest rate changes affect the XLK and XLV ETFs?

The tech sector has been more sensitive to interest rate changes, with a correlation coefficient of 0.7, compared to the healthcare sector’s correlation coefficient of 0.4.

What is the dividend yield of the XLK and XLV ETFs?

The current dividend yields for the XLK and XLV ETFs are 0.8% and 1.2%, respectively.

My Take

As an app developer and professional chef, I have always been interested in the intersection of technology and healthcare. The performance of the XLK and XLV ETFs has been impressive, but it’s essential to consider the underlying factors driving their performance. I recommend reading The ETF Book: All You Need to Know About Exchange-Traded Funds to gain a deeper understanding of the ETF market. In my experience, a well-diversified portfolio that includes a mix of tech and healthcare ETFs can provide a stable source of returns. I also recommend considering complementary products, such as Investing For Dummies and The Little Book of Common Sense Investing.

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Practical Summary

• Invest in a mix of tech and healthcare ETFs to diversify your portfolio
• Consider the underlying factors driving the performance of the XLK and XLV ETFs
• Read The ETF Book: All You Need to Know About Exchange-Traded Funds to gain a deeper understanding of the ETF market
• Allocate your portfolio based on your risk profile, with a conservative investor allocating 60% to the XLV ETF and 40% to the XLK ETF
• Monitor interest rate changes and their impact on the tech and healthcare sectors
• Consider complementary products, such as Investing For Dummies and The Little Book of Common Sense Investing
• Stay up-to-date with the latest market trends and news from reputable sources, such as YCharts, State Street Global Advisors, and Federal Reserve

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Written by Vladys Z. — App developer and professional chef. Passionate about improving lives with science-based, practical content. Follow me on YouTube.